Oracle's expensive artificial intelligence makeover is worth it

Spending a lot of money to hopefully make a lot more money has quickly become the norm in artificial intelligence. Oracle will be taking that to a whole other level.

- Dan Gallagher

The software giant rocked Wall Street last week after reporting a huge jump in contracted future revenue to provide Al computing services . Over the next three years, those deals could double the size of what is already one of the world’s largest software companies by annual revenue.

The prospect of a deal to keep TikTok running in the U.S. is another potential boost for Oracle, given that the app’s owner, ByteDance , is already a major customer.

But the stock has been on a rollercoaster. Oracle’s market value soared by more than one-third to over $900 billion after the company announced the revenue deals as part of its fiscal first-quarter report.

It then gave back a chunk of those gains after investors considered the potential complications coming from such a massive increase in future obligations.

Even so, Oracle’s stock is now trading at more than 40 times forward earnings—the highest since 2001, according to FactSet data.